In a related pair of decisions, two courts, presented with precisely identical facts, issue wholly contrary rulings.
In Mountain States Mutual Casualty Company v. Kilpatrick d/b/a Hog’s Breath Saloon & Restaurant, No. 06-CV-00221-WDM-OES, 2007 WL 2506640 (D. Colo. Aug. 30, 2007), Mountain States Mutual Casualty Company (“Mountain States”) issued a commercial general liability insurance policy (the “CGL Policy”) to Tim Kilpatrick d/b/a Hog’s Breath Saloon & Restaurant (“Hog’s Breath”). Hog’s Breath employees routinely emptied greasy water into the sewer drain outside the bar which congealed in the city’s sewer system. Standing over a manhole while cleaning the sewer line near Hog’s Breath, a city employee smelled hydrogen sulfide, which forms naturally from the breakdown of organic material. When a clog in the sewer line broke free, the concentration of hydrogen sulfide increased dramatically rendering the employee unconscious and causing him to fall into the manhole. A second employee entered the manhole and was similarly rendered unconscious. The employees sued Hog’s Breath, alleging they incurred injuries, damages, and losses due to Hog’s Breath’s negligence in dumping cooking oil and grease into the sewer line.
Hog’s Breath filed a claim with Mountain States requesting defense and indemnity coverage pursuant to the CGL Policy, which included a standard “absolute” pollution exclusion clause. Mountain States filed a declaratory judgment action seeking a ruling that coverage was barred by the pollution exclusion in the CGL Policy. The issue in Kilpatrick was whether cooking oil and grease qualified as “contaminants.” Relying on dictionary definitions of “contaminant,” the court reasoned that as substances that soil and stain and otherwise made the sewer unfit for use, the cooking oil and grease were “contaminants.” Accordingly, the court ruled that Hog’s Breath’s claim fell within the CGL Policy’s pollution exclusion clause barring Mountain States’ duty to provide it coverage.
The employees eventually obtained a considerable judgment against Hog’s Breath, totaling $3.8 million. Because the employees were not parties to the above-cited action, the ruling was not binding on them and they sought to garnish the CGL Policy. Therefore, in Christopher Roinestad and Gerald Fitz-Gerald v. Tim Kilpatrick d/b/a Hog’s Breath Saloon & Restaurant and Mountain States Mutual Casualty Company, No. 09CA2179, 2010 WL 4008895 (Colo. App. Oct. 14, 2010), the court was presented with precisely identical facts as in Kilpatrick.
The Roinestad court reasoned that the CGL Policy’s pollution exclusion clause did not clearly and specifically alert Hog’s Breath that coverage would be excluded in the event injury results from a sewer line clogged by the negligent dumping of cooking oil and grease. This is because cooking oil and grease, the court concluded, are not unambiguously “contaminants” under the CGL Policy’s pollution exclusion clause. Consequently, the CGL Policy’s pollution exclusion clause did not act to bar coverage for Hog’s Breath’s claim to Mountain Sates.
Insurers regularly deny coverage on the basis of the pollution exclusion, arguing that the exclusion is unambiguous and enforceable under all facts and circumstances. As Kilpatrick and Roinestad plainly demonstrate, this is simply not the case, for even when presented with precisely identical facts, courts may issue wholly contrary rulings. As a result, insureds must closely scrutinize the facts and circumstances surrounding their claims for coverage to discern any ambiguity that may exist in applying the pollution exclusion to those facts and circumstances.